Combined Portal to be The Largest India Related Internet Portal
Monday November 29, 8:58 am Eastern Time
Company Press Release
SOURCE: Satyam Infoway Limited
Satyam Infoway Limited Announces Agreement to Acquire
IndiaWorld Communications Private Limited
Combined Portal to be The Largest India Related Internet Portal
MADRAS, India, Nov. 29 /PRNewswire/ -- In a major internet related development in India, Satyam Infoway Limited (Nasdaq: SIFY - news), the country's leading integrated internet and e Commerce player, announced today that it has signed an agreement with the shareholders of IndiaWorld Communications Private Limited (``IndiaWorld'). Pursuant to this agreement, Satyam Infoway intends to acquire all of the outstanding shares of IndiaWorld Communications for Rs. 4,990 mm ($115 million) in a two-step cash transaction which would eventually result in the integration of IndiaWorld's popular websites with Satyam Infoway's portal satyamonline.com
Satyam Infoway's portal satyamonline.com, which includes several popular websites such as walletwatch.com, carstreet.com, carnaticmusic.com, is focused on providing content and facilitating e-commerce services primarily to Indians resident in India. The portal registered an aggregate of 13 million pageviews in October 1999, a substantial part coming from within India, making it one of the leading portal networks dedicated to serving the needs of Indians in India.
IndiaWorld's websites, very popular with overseas Indians (NRIs) worldwide, include samachar.com (covering India related news), khel.com (dedicated to covering cricket), khoj.com (the premier Indian search engine), bawarchi.com (providing more than 3000 Indian recipes) and various other sites focussing on niche areas of interest to overseas Indians. IndiaWorld's websites registered an aggregate of 13 million pageviews in October 1999 -- most of them coming from outside India.
The acquisition would be a good strategic fit to Satyam Infoway's portal business adding a large 'Overseas Indian audience' to the large 'India based audience' that satyamonline.com currently enjoys. The combined portal network is expected to be a mega portal for India interest audience in India and elsewhere.
R. Ramaraj, Chief Executive Officer of Satyam Infoway, said ``IndiaWorld is a perfect fit for Satyam Infoway. SatyamOnline is already a very popular portal in India with focus on purposeful browsing and e commerce. ties2india.com , the new joint venture with Bank of Madura, is focused on providing financial services and e commerce to India interest audience overseas. IndiaWorld, with its dominant audience overseas, would provide that perfect fit to make SatyamOnline the portal of choice for India. The transaction signifies our efforts to continue to aggressively pursue growth initiatives that will result in shareholder value creation'
Rajesh Jain, Managing Director of IndiaWorld, said ``IndiaWorld, a pioneer with over four years of history, has secured a unique position with overseas Indians. Satyam Infoway has created a portal business with a strong focus on audience within India. The combined portal would be an undisputed leader in providing content and services over the internet to India interest audience globally'.
B. Ramalinga Raju, Chairman of Satyam Infoway commented ``this is truly a momentous event in the history of the internet in India. I am very pleased that the Satyam Infoway team has made an important strategic move that fortifies its leadership position' Mr. Raju is also the Chairman of Satyam Computer Services Limited, of which Satyam Infoway is a subsidiary.
Hemendra Kothari, Chairman of DSP Merrill Lynch, who advised IndiaWorld on the sale transaction, said ``this transaction represents a win-win for both parties. While being the largest transaction of its kind from India, I am particularly pleased that it heralds the recognition of internet entrepreneurship in India, similar to the huge phenomenon witnessed in the Silicon Valley. We are happy to have played a role in combining two complementary business models into what we believe would be the leading portal of India.'
Satyam Infoway has purchased 24.5% of the outstanding shares of IndiaWorld for Rs 1,222 mm ($28 million). In addition Satyam Infoway has acquired an option to purchase the remaining 75.5% of the outstanding shares of IndiaWorld at any time prior to 30 June 2000 for an exercise price of Rs 3,765 mm ($87 million). It has placed a non-refundable deposit of Rs 513 mm ($12 million) for the option. Ernst & Young have provided Satyam Infoway with a certificate of fairness of valuation for the transaction.
For U.S. GAAP reporting purposes, the initial purchase of shares will be accounted for under the equity method of accounting. Upon completion of the transaction, the acquisition will be treated as a purchase.
Satyam Infoway, the leading integrated Internet and e Commerce player in India, is the second largest national provider of Internet access to consumers and businesses. Its products and services include consumer internet access services, portal services and corporate and B2B network and ecommerce services. The Company's largest stockholder is Satyam Computer Services Limited, an Indian information technology services company which is traded on the principal Indian stock exchanges
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. For a discussion of the risks associated with Satyam Infoway's business, please see the discussion under the caption ``Risks Related to Our Business' in Satyam Infoway's Report on Form 6-K for the quarter ended September 30, 1999 which has been filed with the Securities and Exchange Commission.
Contact: Mr. R. Ramaraj, Chief Executive Officer, Mr. T. R. Santhanakrishnan, Chief Financial Officer, both of Satyam Infoway Limited, +91-44-435-3221.
SOURCE: Satyam Infoway Limited
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